DTZ has calculated that commercial property investors across Europe are facing a debt funding gap of €115 billion in the next two years, as loans come up for refinancing.
According to the global real estate consultancy, the UK and Spain have the biggest funding gaps at €42 billion and €23 billion respectively, but smaller markets including Ireland, Hungary, Romania and Portugal also have large gaps, relative to their size.
The report also challenges the wisdom of using the “extend and pretend” model, in the medium term.
The model, which has been adopted by many lenders in the last two years, allows the rolling over of loan maturities for a year or two.
However, DTZ claims it increases the problem in future years.
According to the firm, “extend and pretend” can restrict the availability of capital for new and more profitable lending, “in turn limiting new transaction volumes and further capital value improvements”.
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UK faces €42bn commercial property debt funding gap
DTZ has calculated that commercial property investors across Europe are facing a debt funding gap of €115 billion in the next two years, as loans come up for refinancing.
According to the global real estate consultancy, the UK and Spain have the biggest funding gaps at €42 billion and €23 billion respectively, but smaller markets including Ireland, Hungary, Romania and Portugal also have large gaps, relative to their size.
The report also challenges the wisdom of using the “extend and pretend” model, in the medium term.
The model, which has been adopted by many lenders in the last two years, allows the rolling over of loan maturities for a year or two.
However, DTZ claims it increases the problem in future years.
According to the firm, “extend and pretend” can restrict the availability of capital for new and more profitable lending, “in turn limiting new transaction volumes and further capital value improvements”.
